Google's Compute Engine, announced Thursday morning at the company's annual developers' conference, gives Google a new way to monetize its huge investment in data centers and networking, offers new options for companies looking to run their businesses in the cloud, and presents a direct challenge to Amazon Web Services, the dominant player in offering computing Infrastructure as a Service.

If Wednesday’s announcement of Google’s Nexus 7 tablet - aimed squarely at Amazon’s Kindle Fire - didn’t make it clear that the big-boy competition these days isn’t just among the likes of Google, Apple, Facebook and Microsoft, the announcement of the Google Compute Engine definitively states that the conversation also has to include Amazon, which makes far more money selling computing services than it does selling books.

The service is still in “limited preview” and details were initially sketchy, but the Google Compute Engine offers companies access to the Linux Virtual Machines and network backbone connections that Google uses to power its own business. Pricing can be seen here, but the company claims “50% more compute for your money than with other leading cloud providers.”

Passing the Savings on to You

Urs Hölzle, Google’s first VP of engineering, told the Google I/O developers' conference that Google has “worked very hard for decades to lower the cost of computing” and is now “passing the savings on to you.” (Similarly, Amazon Web Services was created using the infrastructure Amazon built for its own massive e-commerce operations.)

The initial pitch seems to be for big data supercomputing uses that need massive scale. The introduction demoed a genetic analysis application at the Institute for Systems Biology using 600,000 computing cores.

Google claimed that the Compute Engine offers better performance than competitors, and initial reports from beta testers seem to bear that out.

Who Is Google Computer Engine For?

According to a Google spokesperson, during the limited preview, customers interested in Compute Engine can let Google know of their interest, and it will choose the users likely to get the most benefit.

So who would fit the profile? The spokesperson said the rule of thumb is the need for 100 cores or more.

The spokesperson added that the limited preview is likely to last months, not years. The technology itself is ready, apparently, but the company wants to make sure it can offer a comparable sales and customer support experience.

It’s still very early, of course, and the Google Compute Engine is far from offering the complete suite of cloud computing products already available from Amazon and smaller competitors like Rackspace. But there’s no question that Google has the infrastructure in place to make Compute Engine a credible alternative.

The big question is how much Google cares about this market, and how much attention and resources it will devote to a brand-new set of very demanding customers who couldn’t be more different than the millions of consumers using Gmail.

The Specs:

According to Craig McLuckie, product manager of Google Compute Engine in The Google Developers Blog:

Compute. Launch Linux VMs on-demand. 1, 2, 4 and 8 virtual core VMs are available with 3.75GB RAM per virtual core. Storage. Store data on local disk, on our new persistent block device, or on our Internet-scale object store, Google Cloud Storage. Network. Connect your VMs together using our high-performance network technology to form powerful compute clusters and manage connectivity to the Internet with configurable firewalls. Tooling. Configure and control your VMs via a scriptable command line tool or web UI. Or you can create your own dynamic management system using our API.

Initial partners include RightScale, Puppet Labs, OpsCode, Numerate, Cliqr and MapR.